What is an E-Mod, and What Does It Say About Your Company?

coverage compliance

Let’s start with establishing what the experience modification factor is, also known as an e-mod. The e-mod is a metric that is used in determining a company’s premiums. This metric can heavily impact what rates you are eligible for, along with either a significant debit or credit in addition to the rate. So, the e-mod will affect not only the rate, but a significant premium penalty or discount depending on what that number reflects.

The benchmark for an e-mod is 1.00, meaning 1.00 is par for the company. Any number below 1 is viewed as a positive and that your company is safer than that of a competitor utilizing the same class codes. It’s just the opposite if your e-mod is above 1.00, say 1.75 for example. That says your company has struggled with losses either frequently or catastrophically — possibly both making your company even riskier.

So, how is the e-mod calculated, and who oversees this calculation? Generally, with some exceptions, the National Council on Compensation Insurance (NCCI) will calculate your company’s e-mod. The calculation will be recalculated each year but is based on three-year rolling losses.

What can an employer do to improve their e-mod? If the e-mod is driven by companies’ workers compensation losses, then the key is to reduce losses and manage the losses that do occur.

So, how do we begin to try and reduce or eliminate losses? We can start by investing in safety and making the appropriate changes within the organization that says we value safety. The size of the organization will determine what level of investment the organization can implement — from providing the appropriate personal protective equipment to having weekly lunch box safety talks to help reduce accidents.

One of the challenges most employers are working through is a tight labor market. Companies have had to hire employees they otherwise would not have hired in a different market. With this comes additional responsibility to the owners in training the employees. At times, companies are hiring employees right out of college with no experience as opposed to a more seasoned employee. It is important when onboarding these employees that the employer goes over duties they would be required to carry out while working there. Go over what is expected and teach the employee how to perform the tasks, from picking up items that may be heavier and make back injuries more prone, to stacking items in the office that may create a falling risk.

Safety is applicable in all industries, and it’s important we identify risks and continually work to ensure we are creating a safe workplace so all employees can return safely to their homes.

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